The company, which builds oil platforms and gas-export plants for energy producers, is negotiating a restructuring plan that could see its debt converted into equity with existing term-loan lenders getting most of the shares; unsecured creditors would receive less than 10% of the equity along with warrants.
According to sources of Bloomberg, the terms of the restructuring are still being negotiated and could change.
It is said that the Baupost Group and HPS Investment Partners may provide a bankruptcy loan of about $2 billion.
Namely, the company has been under significant pressure since September, when its stock and bonds plunged on news that it had hired turnaround advisers. The company has also struggled to integrate its acquisition of Chicago Bridge & Iron Co. and clear a backlog of projects, crimping earnings.
Late last year the company secured part of a $1.7 billion rescue financing package and entered into a forbearance agreement with some of its lenders- yet, that expired on Wednesday, January 15, and its credit agreements were revised so that acceleration of its bonds wouldn’t constitute a default through Tuesday, January 21.
Whatsoever, late in December 2019, McDermott International, Inc. along with Chiyoda International Corporation and Zachry Group, announced that the first commissioning cargo of LNG has been shipped from Train 2 of the Freeport LNG project on Quintana Island in Freeport, Texas. The announcement for the first cargo was considered a precursor to substantial completion of Train 2.
Late last week, its 2024 bonds were trading around 9.5 cents on the dollar, according to Trace bond-trading data.
McDermott has also been trying to shore up liquidity through a sale of its Lummus Technology business. The company previously said it had received unsolicited bids to acquire all or parts of Lummus with a valuation exceeding $2.5 billion.
It was in May, when the Weatherford International Plc, an oilfield services provider, announced that they would file for Chapter 11 bankruptcy protection, in light of its heavy debt load and years of losses, Reuters reported. The company noted that it will continue its service towards to its customers and other partners.
Specifically, the company never managed to deal with the challenges of the 2014 oil price collapse and planned to decrease its long-term debt by more than $5.8 billion, through the restructuring; its shares hardly fell 61% to 14 cents in extended trading after the company's announcement on looking for protection from creditors and a wider quarterly loss.